I am running a private limited software company with myself and my wife as its two directors with 50% share each. We are divorcing and my wife is currently not cooperating well in the affairs of the company. The company doesn't have any land, building, big machinery, etc. as its assets. The biggest asset is the product intellectual property which is not registered or patented. An important thing to note is that my wife may not agree to pass any board resolution as there can be several disagreements. Can I unilaterally decide to quit the directorship, get 50% of the company's assets, and completely disassociate myself from the company? Since it is a software product company, can this can be treated as a "Divisible Property" with both the existing shareholders getting a copy of the intellectual property and equal share in the current financial assets after making all the pending payments including the payables to the directors?
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There must be minimum two directors in a private limited company as per Companies Act. If a company have only 2 directors and one of them wants to resign on their own, it will violate the act. So while filing form DIR-12, the resignation of one director will not be allowed.
2)The only alternative is to call a General Meeting of shareholders and appoint a new director therein.
It's standard to give two weeks' notice when you resign, but when you're in a position of authority, it can be wise to provide your old company with more time to find a replacement.
A new Director has to be appointed before the resignation of the existing director. For the simple reason , that the Companies Act mandates that there will be minimum of two directors at any time in a private limited Company.
Practically, if you file a DIR -12 in the above situation, the DIR-12 will not be accepted by MCA quoting the requirement of minimum number of 2 Directors required under the Act..
A Director can resign from the company at any time as per section 168 . The company may fill the resulting casual vacancy as per section 161(4) in case an additional director can not be brought. However , no time limit has been mentioned in the section 161(4) for filling up the resulting vacancy.
- As per the Companies Act , there should be minimum of two directors at any time in a private limited Company.
- Further, as the Companies incorporated under the Companies Act, are mandated to file a DIR 12 form on the official portal of MCA to notify the Registrar of Companies about the detail relating to the Change/ appointment/Resignation of directors.
- Further, if you will quit , then the DIR-12 will not be accepted by MCA quoting the requirement of minimum number of 2 Directors which is required under the companies Act.
- Hence, a calling a General Meeting of shareholders and appoint a new director is needed.
Dear client,
Generally, if you and your wife are equal shareholders and directors of the company, any significant decisions, such as dissolving the company, may require mutual agreement and compliance with the company's articles of association or any existing agreements.
If you wish to exit the company and receive your share of the assets, you may need to negotiate a buyout or exit agreement with your wife. Such an agreement can specify the terms and conditions for transferring your shares, including any compensation for your share of the intellectual property.
If disagreements arise, legal mediation or litigation may be necessary to resolve the issue. It's essential to consult an attorney to navigate this process and protect your interests. Additionally, it's important to review your company's governing documents and any existing shareholder agreements to understand your rights and obligations.
Yes you can do the above
